The company issued a correction notice to the Australian Securities Exchange regarding media reports on Wednesday that the government had made a “substantial offer” to Metgasco.

“As reported in our ASX release of September 1, Metgasco has been in discussions with the

government regarding settlement of the matters between Metgasco and the government,” the company said.

“Metgasco advises that the government has made a non-binding indicative offer with a value range and associated conditions.

“The directors do not consider this range would be acceptable to shareholders, even at the upper end.”

After the company announced the legal action on Tuesday, NSW Energy minister Anthony Roberts noted that Metgasco had stated that it was “happy to resume good-faith discussions with the government”

"The government also remains ready to continue negotiations in good faith with Metgasco,” Roberts added.

Negotiations over compensation have been going since May when Roberts said the government would not appeal a Supreme Court ruling that an order last year to suspend drilling at the Bentley site on the state’s north coast was unlawful.

The share price of Metgasco, which has spent $120 million on its north coast gas licenses over the past 10 years, plummeted 40% when the suspension decision was handed down without warning.